20-Dec-2011

Pension Bill - Only Assurance But No Guarantee?

The government is understood to have agreed to the BJP demand for inclusion of assured returns to retired employees in Pensions Bill. The Standing Committee on Finance, headed by Sinha, had recommended for an assured return option to new subscribers.

Pensioners are concerned over the fate of their hard-earned money as the new bill proposes to invest the pension funds in the market. The proposed Bill does not ensure guaranteed return to pensioners. The bill will provide legal backing for putting pension funds into stock markets.

At present, pension funds of over 10 lakh employees in the country are managed by domestic players such as Life Insurance Corporation of India, State Bank of India, Kotak Mahindra Bank and Reliance Capital, but foreign companies have evinced interest in the country’s pension market. The PFRDA bill, if passed, will open country’s lucrative pension sector to foreign players.

So the bill assures return, but does not guarantee it? And note the innocuous sentence about foreign companies evincing interest. A bit of a lucky coincidence, for the foreign companies. A lot of the 'second generation reforms' are somehow just what the foreign companies have evinced interest in.